The short-run Phillips curve and the long-run Phillips curve are different because
A) the expected rate of inflation is always zero in the long run, while it is a positive number in the short run.
B) the expected rate of inflation is always zero in the short run, while it is a positive number in the long run.
C) the actual and expected rate of inflation are equal in the short run.
D) the actual and expected rate of inflation are equal in the long run.

Question

Quizplus · Accepted Answer

The long-run Phillips curve is vertical, reflecting the idea that there is no trade-off between inflation and unemployment in the long run. This implies that the actual and expected rates of inflation are equal in the long run, as the economy adjusts to its natural rate of unemployment regardless of the inflation rate.

The Short-Run Phillips Curve and the Long-Run Phillips Curve Are